Saturday, June 27, 2009

MAS vs Air Asia: MAS's strategy

Tony Fernandes in his Facebook said "Everyone rushing with out new simple low fares . It's time for airports to reduce passanger taxes. Time for all yo travel".

With their arch rival, Malaysia Airlines offering low fares of their own, some even beating Air Asia's fares, it sounds like Air Asia is feeling the heat.

Idris Jala and his team know that for MAS to stay relevant, they cannot afford to lose in Malaysia, their home base. For that, they need neutralize the threat from Air Asia. It will be a bitter war and they will fight from teeth to teeth.

MAS, as we know, is fast-tracking their business transformation plan. They know that it is their only hope of survival. Against them is the lowest cost airline of the world with aggressive ambition.

The aim is to transform MAS into a five star value airline, an airline which offers five star service and quality at a very affordable price.

MAS knows that it is close to impossible to beat Air Asia's cost base. They can't beat Air Asia when it comes to cost. To overcome this, MAS hopes that by offering exceptional products, product of such high quality at an affordable price, people will find enough incentives to pay the extra money to fly with them.

Though MAS still has a fair way to go in their business transformation, one can see early signs that MAS's effort is starting to pay off and they are winning back customers. Their load factor has increased to ~65% this month from ~50% in the first quarter.

A resurgent MAS is giving Air Asia a run for their money.

On the other hand, I couldn't help but have the inkling suspicion that Air Asia is seeking an "extra hand" in gaining more leverage to compete with MAS. The airline already enjoys a much discounted airport tax but they want it to be reduced further more. Air Asia knows this will stump further inroads by MAS.